IPOs Fuel Morgan Stanley’s Wealth Asset Growth as Bank Post Strong Profits

Morgan Stanley reported growth in client assets for the second quarter across its workplace pipeline, largely due to clients pooling their assets into initial public offerings. 

The bank’s wealth management division added $148 billion in net new assets, CEO Ted Pick said during the firm’s earnings call with analysts.

Morgan Stanley, alongside Goldman Sachs, was one of the leading investment banks in SpaceX’s IPO back in June. 

CFO Sharon Yeshaya said on the earnings call for the quarter that ended on June 30 that the bank has roughly 70% of the top 100 “unicorns” by market cap in its workplace channel.

“With strong capital markets, the power of our client acquisition funnel is becoming increasingly evident. Workplace brings relationships and assets onto the platform, and we are well positioned to support these new relationships,” Yeshaya said. 

The bank also stated that it has reached its anticipated goal of $10 trillion across its advisor-led and self-directed channels.

As Morgan Stanley posted record earnings for its wealth unit, the bank also emphasized continuing its growth strategy for its client acquisition funnel, as the wealth management industry continues to experience advisory teams leaving large wirehouses to go independent. 

With its profits from IPOs, which have contributed to more than half of the $148 billion the wealth business pulled in for the quarter, the bank remains committed to adding more capabilities to retain its client base, Yeshaya added. 

“You’re not going to be able to have that corporate relationship at a much smaller level. That’s something unique to Morgan Stanley and is the bread and butter of the integrated firm,” Yeshaya said. 

Morgan Stanley’s wealth management unit reported a net revenue of $8.9 billion, up 14% from $7.8 billion year-over-year. Meanwhile, the unit’s net interest income increased to $2.2 billion, up $1.9 billion year-over-year.